By Lindsay Bush
Isn’t it interesting, and a coincidence, that Matthew Pennycook MP (Minister of State for Housing and Planning) made a statement just one day ahead of the BBC publishing a major investigation into leaseholders suffering inflated charges and lack of services for the privilege?!
Matthew Pennycook MP, Minister of State for Housing and Planning
Despite this, Pennycook makes some positive noises about home ownership and then turns his attention, quite rightly, to the downsides of leasehold tenure. As a leaseholder living in a housing association property myself, I aim to offer my opinion on his comments.
Pennycook recognises, which is quite surprising, that millions of leaseholders and residential freeholders are currently suffering as a result of unfair and unreasonable practices and that the government needs to act urgently to provide relief.
He also acknowledges that for too long, leaseholders have borne the brunt of opaque and excessive costs being passed on to them and that government intends to act to protect leaseholders from abuse and poor service, all of which is refreshing to hear from a Minister.
The Leasehold and Freehold Reform Act 2024
Despite this, even if the Leasehold and Freehold Reform Act 2024 does come to pass, and even if the intention is to make it easier for us to challenge service charges that we consider unreasonable, he unfortunately fails to recognise that taking cases to the First Tier Tribunal (FTT) doesn’t actually solve anything.
Even if a case is won by a leaseholder, the FTT does not have the remit to enforce any financial redress and even if it did, it doesn’t necessarily mean that the landlord in future will learn from their misdeeds or sharp practices and seek to improve their conduct. The FTT takes cases on each individual and separate merit and neither does it have the remit to link similar issues with other cases concerning the same landlord.
All this does is allows the landlord to continue their misdeeds in the hope that most victims of their bad practice are unable to seek redress. This enables overcharging and other poor standards to continue. There is no real deterrent.
The BBC has published and broadcast a number of articles on the problems of leasehold and service charges
The FTT is the only statutory body able to investigate service charge inaccuracies. There are no regulatory standards covering service charges, so the Regulator of Social Housing plays no role. The Housing Ombudsman Service’s remit does not cover service charge accuracy, and they can only investigate how well the landlord handled any subsequent complaint. The Serious Fraud Office, Financial Conduct Authority, and Charity Commission have also consistently refused to intervene when SHAC members have presented evidence of systematic overcharging.
Finding Solutions
Service charge inaccuracies affect renters (tenants), shared owners, and leaseholders. They are applied by all types of landlord: council, housing association, and private.
The recent media interest in leasehold and particularly overcharging on services, as well as SHAC’s own research and evidence gathering underscores that every year, hundreds of thousands of people find themselves with service charge demands that they know to be inaccurate.
SHAC has campaigned extensively to highlight service charge abuse.
SHAC End Service Charge Abuse campaign page
As the law stands currently, no matter how erroneous or extortionate those demands are, tenants and residents are legally obliged to pay them and then argue for overpaid monies to be refunded.
The ‘pay now, challenge later’ rule leaves tenants and residents out of pocket, creates a financial advantage to landlords who overcharge for services, and results in a system in which service charge abuse is endemic. Under the current system, landlords have no incentive to prevent, investigate or remedy inaccuracies.
On the other hand, landlords and others say that a total reversal of this rule would incentivise tenants and residents to dispute their bills if it meant they didn’t immediately have to pay up.
SHAC believes that there is an alternative that balances the interests of landlords on one side, and tenants, leaseholders, and shared owners on the other.
We want the law changed so that disputed service charges can be paid to the courts and only passed onto landlords if they can prove the legitimacy of the bills. Otherwise, the money is returned to the tenant or resident. Any new law must apply to all those affected. To support this call, please sign – and most importantly share – our petition:
27 November 2024
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Thanks Lindsay for this informative article which lays out the horrible facts of service charge abuse. I think you’ve gone easy on Pennycook who knows all about these ongoing scandals but has has signalled a screeching halt to the necessary reforms and abolition of leasehold. One can only assume that he and his colleagues feel they need Housing Associations to meet their 1.5 million home target!
Great article and great work.
Having a dispute with Southern housing concerning the overcharging of Buildings insurance via the ombudsman, I didn’t realise they were so toothless until reading your article.
What to do?
How do you battle the same bland avoidance via batting the ball in the grey grass of management waffle?